Crowdonomic, the latest crowdfunding site from Singapore, launches to help startups raise money. But how viable is crowdfunding as a source of financing?
Earlier last week, Crowdonomic launched as Singapore’s first professionally run reward-based crowdfunding service, with 6 fundraising campaigns by home-grown start-ups, each targeting to raise up to S$30,000 from their supporters. With the reward-based crowdfunding platform, startups raise funds from the public and reward their supporters in various ways, for example by granting early access to the next release of a popular game or a new product.
Leo Shimada, founder of Crowdonomic, shared that their ultimate goal is to help entrepreneurs address a key pain point: the funding gap. Since the market, or “crowd,” decides who to fund, it offers a more democratic alternative to how capital is allocated. Leo also claims to have a higher standard of service delivery based on their “deeper understanding of client start-up needs.” The team behind Crowdonomic includes people with diverse technical, investor and entrepreneurial backgrounds. The core team’s credentials include world-class institutions such as McKinsey & Company and Accenture and MBAs from INSEAD.
Crowdonomic is also backed by a mix of angel investors and venture capital from across Asia and the US, although no details about the angel investors and venture capitalists are revealed.
Will Crowdonomic work?
While it provides an additional avenue for startups to raise funding, building a marketplace of startups and backers is not easy. Marketplaces are hard to build. One of the main factors that can determine its success is liquidity. The first marketplace to reach liquidity wins. But what exactly is liquidity?
Simon Rothman of Greylock Partners defines it as the reasonable expectation of selling something you list or finding what you’re looking for.
Liquidity also ties in hand in hand with the good old chicken and egg problem. As a startup, when I post my campaign on Crowdonomic, I would expect at least some backers backing my campaign. As a backer, when I visit Crowdonomic, I would expect to find some interesting startups for me to back. To stand out and be a truly successful crowdfunding platform, either one must happen. Judging from the current 6 campaigns on Crowdonomic, the platform definitely has a long way to go.
Of course, nobody said its easy. As Simon puts it, getting both sides of a transaction at the same place at the same time for the same thing can feel like it’s an order of magnitude more difficult than a more traditional one-sided commerce business. But when the magic happens, it happens, and all of a sudden you’ve got Kickstarter.
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